NMa imposes fines on Dutch media company Wegener and five executives totaling EUR 20 million
The Netherlands Competition Authority (NMa) has imposed fines on Dutch media company Koninklijke Wegener N.V. and on five of its executives, totaling more than EUR 20 million. Wegener's fine is EUR 19 million. The NMa has imposed the fines for non-compliance with an instruction that the NMa in 2000 imposed on Wegener in connection with its acquisition of publishing company VNU Dagbladen in 2000. Considering the role that the five Wegener executives played in the violation, they have been personally fined a total amount of EUR 1.3 million. In addition, the NMa has imposed an order subject to periodic penalty payments, ordering Wegener to comply with the earlier imposed instruction within a year. If it fails to comply with said order, Wegener risks penalty payments of EUR 1 million per quarter with a maximum of EUR 20 million.
Pieter Kalbfleisch, chairman of the Board of the NMa explains: 'We are taking this case extremely seriously, because the instruction that was disobeyed was actually put forward by Wegener itself in order for us to grant approval to the acquisition of media company BN/De Stem. It has now turned out that Wegener, for years, at least from 2002, has failed to comply with the instruction.' In the instruction, the NMa demanded that the independence of both newspapers would continue to be guaranteed, thereby not just ensuring that readers would continue to enjoy their freedom of choice, but also that price increases and reader selection reductions would be prevented. However, an NMa investigation has revealed that both newspapers since 2002 have completely ignored this instruction. Mr. Kalbfleisch continues: 'We adopt the so-called 'high-trust' approach: you have our trust, but if you violate that trust, you will be fined severely.'
According to the NMa, five Wegener executives were directly involved in the violation, and each of them have been imposed personal fines, varying from EUR 150,000 to EUR 350,000. Four of them were appointed in 2002 as special supervisory directors to make sure the instruction would be carried out properly. They have thus failed to fulfill this special and important task, and are therefore fined.
The Wegener/VNU Dagbladen case
After the acquisition of VNU Dagbladen in 2000, Wegener, which already owned regional newspaper Provinciale Zeeuwse Courant (PZC), became owner of BN/De Stem as well. The activities of PZC and BN/De Stem have an overlap in the region of Zeeuws-Vlaanderen, in the southwestern part of the Netherlands, where PZC publishes its 'Zeeuws-Vlaanderen' edition and BN/De Stem its 'Zeeland' edition. The acquisition resulted in a dominant position in Zeeuws-Vlaanderen as both of these papers no longer had to compete with each other. Such a situation could have adverse effects on readers, such as price increases and reader selection reductions of both papers. The instruction that the NMa had attached to the acquisition, and which officially is still in effect, offsets these negative effects. It requires Wegener to guarantee PZC and BN/De Stem's mutual independence after the acquisition. Furthermore, Wegener must continue to publish both papers in Zeeuws-Vlaanderen.
NMa investigation
Triggered in part by a reader complaint filed with consumer information portal Consuwijzer, the NMa in 2009 launched an investigation into Wegener's compliance with the instruction. The investigation has revealed that, contrary to the instruction of mutual independence, there is, instead, a single news organization, where both the editorial and commercial policies are harmonized between BN/De Stem and PZC for the region of Zeeuws-Vlaanderen: both companies work closely together, exchange their articles, and they harmonize their newsgathering activities. So apparently, these newspapers are not competing with each other. The NMa has thus come to the conclusion that Wegener has disobeyed the instruction, and has therefore imposed a fine on Wegener.
During the investigation, Wegener has submitted a request to the NMa, in which it asked the NMa to revoke the instruction. The NMa is currently considering the request, and is expecting to reach a decision in early fall.